When you’re running a cannabis business in California, getting insurance can be a challenge and sometimes a risk.

Nearly all of the insurers that offer coverage are smaller carriers that aren’t regulated by the state and often are reluctant to enter the industry. California Insurance Commissioner Dave Jones plans to change that.

Jones announced Monday he has approved a program to provide property and liability coverage for marijuana dispensaries, storage facilities, processors, manufacturers, distributors and other cannabis-related businesses operating in California.

“Cannabis businesses need insurance coverage to help them recover when something goes wrong just as any other legalized business does,” Jones said in a statement. “This first-of-its-kind Cannabis Business Owners Policy, or CannaBOP program, will make it easier for more insurers to enter the market and fill coverage gaps for cannabis businesses.”

The Miranda-based Humboldt Redwood Healing Company’s CEO Thomas Mulder said he recently settled out of a civil lawsuit against a former local insurance agent John Ford — not to be confused with the county Planning and Building Director of the same name — whom Mulder claimed embezzled more than $50,000 in workers compensation insurance he paid for cannabis farm workers in 2016.

Mulder said the experience made him hesitant about other companies offering liability and product insurance and resulted in him having to cover his employees through his management company up until recent months.

“When you’re burned for a lot of money and not really necessarily feel like you’re supported right off the bat, it makes you really, really hesitant to do anything,” Mulder told the Times-Standard on Tuesday.

Mulder said as more legitimate businesses enter the industry and with the state program announced by Jones, he hopes that cases like his can be prevented.

“The industry is still in its infancy stage and needs everything possible to be supported to help these businesses succeed,” he said. “They are going to be a large tax base for our community and we need to make sure we do everything to support them now.”

The state’s new policy — complete with forms, rules and rating information — was developed by the American Association of Insurance Services , a nonprofit insurance advisory organization. It comes on the heels of an initiative Jones launched last year to encourage commercial insurers to step in and fill coverage gaps for the cannabis industry.

Phil Skaggs, an assistant legal counsel for AAIS who also help craft the CannaBOP program, said it’s designed as a one-stop shop for marijuana-related businesses in need of coverage.

“We wanted to make sure this provided a fairly robust product liability package,” Skaggs said. “In California, there are lots of pesticide and quality assurance issues that have arisen with cultivation, for example. And when you have a product liability lawsuit you sue everyone in the chain, all the way from the farm to the business that’s selling the product. This provides protection for them.”

California Grower’s Association Executive Director and Humboldt County native Hezekiah Allen said where before there have been challenges by cannabis businesses to obtain coverage or where policies do not mention cannabis at all, the new program allows for a transparent relationship between cannabis and insurance providers.

Allen said that while there are still challenges ahead with what insurance products will look like as well as the larger banking restriction issues, he said the new program is a significant starting point to addressing those issues.

“Having a framework and starting point for an open, transparent conversation with insurance underwriters and brokers is a step forward,” Allen said Tuesday.

Jones’ initiative resulted in the first filing and approval of commercial insurance for the cannabis industry Golden Bear Insurance Co, a state-regulated carrier. The first surety bond program for the industry was announced in February and the first coverage for commercial landlords in the industry and a product liability and product recall program were announced in May.

Terra Carver, the executive director for the Humboldt County Growers Association which represents nearly 170 farmers and other cannabis industry businesses, told the Times-Standard on Tuesday that she is still reviewing the details of the new program.

Overall, Carver said she supports the concept of expanding access to insurance policies for cannabis businesses, which she said have been a gray area and difficult to understand.

“We, as an industry, look forward to being able to enjoy the basic benefit of insurance like other businesses do,” Carver said.

Skaggs said CannaBOP is designed primarily for smaller mom-and-pop operations and startups that need coverage, but don’t know where to find it.

The U.S. maintains a federal prohibition against marijuana. But as long as California courts can enforce insurance contracts, marijuana businesses will likely be allowed to operate, Skaggs said.